Scott D. MacInnes has written a paper entitted, "Interpreting the Collective Agreement: The Duty to Be Reasonable" (1999).

It was written for the Current Issues Series and published by IRC Press, Industrial Relations Centre, Queen's University.

The Executive Summary states:

The authority of arbitrators to require management to act fairly and reasonably
in exercising its discretion under a collective agreement is unsettled. In
one case, for example, the Ontario Court of Appeal found that management
may exercise the discretion conferred on it by the management rights clause
as it sees fit, except when it is constrained by express collective agreement
provisions. But in another case, in a ruling that appeared to be diametrically
opposed, the same court reinstated a ruling by an arbitrator that management
had exercised its discretion unreasonably. Arbitrators have subsequently
attempted to reconcile the two cases. Although the authority of
arbitrators in this area remains largely unsettled, some common themes run
through most recent decisions.

• Obviously, if a provision of a collective agreement specifically requires reasonableness, any decision made under that provision must be reasonable. However, there is not a generally implied duty to act reasonably.
• Arbitrators are entitled to review management's decisions to ensure they were based on bona fide business reasons and only on bona fide business reasons. Management must therefore act honestly and in good faith and avoid arbitrariness and caprice.
• A consensus seems to be forming around the proposition that when a decision conflicts with another right under the collective agreement, the employer has a duty of reasonableness. For example, if a collective agreement requires that overtime be spread evenly around all members of the bargaining unit capable of doing the work, management must be reasonable in judging the ability of employees to do the work. However, the law in this regard is not entirely clear.
• The duty of reasonableness is clearer when disciplinary matters are involved. In such cases, arbitrators are more likely to find a duty of reasonableness implied in the collective agreement.
• Some balance between the rights of employees and employers has been struck, since a limited duty of reasonableness has been developed in the case law. Consequently, the need of employers to make business decisions without them being questioned unnecessarily and the need of employees to be treated fairly and reasonably in the workplace can be recognized.
• The author concludes that although this state of balance could be made a permanent feature of the workplace through legislation, a more satisfactory outcome would be for appropriate provisions to be made through bargaining between parties to a collective agreement.